Posts by Rod David
The First Trade… Draining the batteries.
Proper context can start the day with a solid win and make all the difference.
Enter the chaRTroom here
(pre-open Market Tour begins at 8:55 ET)
Through the prior close…
Wednesday afternoon”s “no-bias trending” above the 2098.25 bias-up signal could have been dismissed if buyers had gained traction for the effort. But exiting the bias environment at 2101.50 above the noon hour”s 2098.50 high didn”t attract strong-handed sponsorship. An eventual fresh high attacked 2104.00, but only after the 3:10-3:20 window that would otherwise have extended higher. Instead, it reacted down toward the 2098.25 bias-up signal that had been broken prematurely.
Overnight action”s new info…
Even then, Wednesday”s 2098.25 bias-up signal didn”t require being retraced, since it had not held decisively when it mattered most. But it was soon tested overnight anyway, touching Wednesday morning”s 2097.25 highs. Then the bottom dropped out — again — sliding through Europe”s opens to 2087.50. Its recovery up to 2098.00 has dipped back down to 2093.00-2095.00.
If, then…
Another day, another overnight plunge. So… Another overnight plunge, another intraday recovery? As I detailed during yesterday”s post-market Wrap, that which hasn”t killed the market doesn”t necessarily make it stronger, but it does earn an obligatory probe above the range. This reward for having absorbed so much selling pressure assumes that selling pressure hasn”t first chipped away entirely at support. Either down here, or up there, buyers will find none others remain to be attracted. The obligatory reward for buyers does have a shelf-life, which is less like an expiration date, and more like a battery”s charge. Potential to new highs remains alive so long as the charge”s reading holds above 2090-2095 through every relevant timing window. It”s being challenged again now, and GM and MMM just missed earnings expectations.
First Trade…
Exiting the open at 9:45 above 2097.50-2098.25 would be unlikely to trigger this morning”s 2095.25 bias-down signal at 10:15. Exiting the open under 2090.00 would likely trigger bias-down. Exiting the open under 2088.00 would become unlikely to recover the 2089.50 bias-down target at 10:15, which would renew the bias-down signal.
Morning bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2110.75 | 2104.00 |
| …would target | 2117.00 | 2110.25 |
| Bias-down: under | 2102.00 | 2095.25 |
| …would target | 2096.25 | 2089.50 |
| Signal status: NO-BIAS, TESTED BIAS-DOWN SIGNAL | FAQ | |
| INTRO VIDEOS #1 and #2 | ||
1. At 10:15, trading above the bias-up signal or under the bias-down signal would put into play a test of its bias-up or bias-down target.
2. Not triggering either bias signal at 10:15 would be “no-bias,” and the bias signals should define the bias environment”s range.
— A test of the opposite bias signal would be targeted if one bias signal was tested before triggering no-bias.
3. Touching the bias signal within 3 minutes either way of 10:15 would invoke a grace period through 10:30 to trigger a late signal.
— “Late” signals don”t require testing the opposite bias signal, but it”s still likely.
4. Still testing the bias signal at 10:30 after invoking the grace period would trigger “noN-bias,” with no bias influence.
Buyers didn”t gain traction for
Buyers didn”t gain traction for their efforts Wednesday. So, what else is new.
Although you would think they deserved it, recovering from an 18-point pre-open plunge, rallying more than 23 points from the overnight low. But that just means Wednesday”s buyers were rewarded. Gaining traction required exiting the bias environment above the noon hour”s high (check), and one of the next two timing windows (nope).
The 2103.75 high did pierce Tuesday”s opening high, but both highs stopped pessimistically short of touching prior highs. This “ineffectual pessimism” is potentially bullish from a contrarian perspective. That hasn”t prevented deep interim dips before. Meanwhile, the optimism of Wednesday afternoon”s “no-bias trending” may need further correcting.
But the ongoing premise is that dips will continue recovering. And that the dips will eventually end — sooner, rather than later… presumably. That eventual session, potentially Thursday (or yesterday, or the day before that), could be very impressive to the upside. More details and pictures with voice over and a very quiet theme song are found in the post-close Wrap recording:
https://roddavid10.mitel-nhwc.com/join/hthpvmp
Pre-close view… Working through pessimism.
Fresh highs aren”t too optimistic. Not, yet.
This afternoon”s 2098.25 bias-up signal was still being tested at 1:20, and not triggered at 1:30. Being a late no-bias environment. The 2098.25 bias-up signal is likely to be retested, but it”s not necessary.
So, the no-bias trending up to 2102.75 can extend higher.
But since the final hour isn”t being entered above the bias environment”s high, the 3:10-3:20 window must trend higher to maintain the rally”s momentum.
Dipping back under 2100.25 would target 2098.25, with 1 point of room for noise under it. Dipping first would be difficult to resume rallying today.
Daily Spot
A daily summary of high-profile members of several complexes… View a more detailed discussion of each chart at the end of today”s Market Wrap.
Eurodollar Mar Contract (EC, ETF: (FXE, UUP))
Firming overnight to test 1.0800 was retraced intraday. Now, recovering 1.0780 should at least target 1.0850. But there is still no signal for the next major leg.
Gold Jun Contract (GC, ETF: (GLD))
Closing Tuesday above its gap up after testing 1194.50 support had left no bullish reason to delay extending the rally, let alone to ever revisit 1194.50. But Wednesday”s open gapped back down to and through Tuesday”s gap up, then extended back down to and through 1194.50. Without recovering 1194.50, the break would target 1169.00-1174.00.
Silver May Contract (SI, ETF: (SLV))
Bouncing overnight into the 16.02-16.10 resistance range was rejected by a break to fresh lows Wednesday, qualifying as a breakout. Following a two-day unconfirmed breakout with another breakout tends not to be confirmed, either. The sequence can continue indefinitely, with potential to 14.95.
30-year Treasury Jun Contract (US, ETF: (TLT))
Initially probing back above the 163-18 sell signal Wednesday was quickly rejected by a deep drop to fresh lows at 161-08, finally probing under the 4-week old low. A one-day plunge probably won”t satisfy the extended distribution, and a second consecutive lower close Thursday would be predictive, but the decline”s momentum remains intact so long as bounces hold 162-00.
Crude Oil Jun Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
The 55.88 pullback limit was probed by 15 cents overnight. Its post-open retest reacted up sharply in reaction to Wednesday”s EIA report. But the rally hasn”t yet resumed, and remains vulnerable to a deeper correction.
Natural Gas May Contract (NG, ETF: (UNG, UNL))
Gapping up again Wednesday tested the 2.60 buy signal (basis May, 2.65 basis Jun) whose recovery would target the 2.80/2.85 area. No alternate pattern is in-play.